Bhaskarudu quits Maruti, Khattar in driver's seat

Maruti Udyog Limited managing director R S S L N Bhaskarudu today submitted his resignation to the company's
board of directors following his appointment as member of the Public
Enterprises Selection Board.

He will relinquish his charge at the end of business hours on Tuesday August 17,
after 16 years of service in the country's largest passenger car
manufacturer. Bhaskarudu had joined MUL on December 9, 1983 and had taken
over as managing director on August 26, 1997.

Bhaskarudu's resignation paves the way for the company's second
managing director Jagdish Khattar to be in the driver's seat.

Bhaskarudu told select media-persons in New Delhi that he had apprised
the Maruti Board at its meeting in Hungary about the government's order
appointing him as a PESB member and expressed his desire to be
relieved.

He would take up his new assignment from August 18,1999.

Bhaskarudu's tenure as MUL managing director was mired in
controversy as Suzuki Motor Corporation, the equal partners in the
joint venture had strongly opposed his appointment. On the other
hand, the government insisted on his appointment.
The issue was resolved by the BJP-led government.

His exit comes five months ahead of schedule.

The row over his appointment was resolved when the BJP-led government
reached a compromise with SMC and cut short Bhaskarudu's tenure
as managing director and decided to appoint Khattar to the post
from January 1, 2000.

No name has been recommended as yet to the post of a whole-time
director to replace Bhaskarudu. The company's board would meet
shortly to ratify Khattar's appointment as the managing director
as also to appoint the new director.

Regarding his new assignment, Bhaskarudu said, ''I am always
happy and I continue to be happy. It was an open order asking me to
join as and when I wanted. But I decided to join as soon as
possible.''

Regarding his tenure as the managing director of the country's
largest car-maker, Bhaskarudu said the company has, under him,
achieved whatever was aspired for. ''We are in the process of
introducing new models and have also built good productivity levels
in the company. The new models are now in various stages of
introduction.''

He also expressed optimism over the future of the company saying
''it is very bright''. The company will, despite the onslaught of
competition, maintain an over 65 per cent market share in future.

Regarding the efforts to make all its vehicles Euro-II compliant,
he said it would put an additional cost burden on the company but
the exact impact of the same is yet to be ascertained. ''It is
definitely an additional cost but the extent to which it would be
passed on to the customers would be debated at the time of launch.''

Bhaskarudu, however, parried questions on the previous tense
relations between the two equal owners of MUL as also on
disinvestment of government holding in the company.

The 20 per cent drop in net profit
notwithstanding, the board of directors of MUL
has maintained a 30 per cent dividend for the fiscal 1999-2000,
resulting in a total outgo of Rs 400 million.

The proposal was recommended at the company board meeting held in
Hungary earlier this month, Bhaskarudu said.

''The proposal would now be taken up at the annual general
meeting for ratification,'' he added.

The company's bottomline had been severely affected in the
1998-99 fiscal due to the major price cuts announced on its models.

MUL earned a profit after tax of Rs 5.23 billion for the financial
year over Rs 6.52 billion the previous year. Following a similar
pattern, the profit before tax was down by 19.85 per cent to Rs 7.83
billion from Rs 9.77 billion.

The total income also took a dive to Rs 81.18 billion from Rs 84.74
billion, losing ground by 4.20 per cent. Faced with difficult market
conditions and pressure on margins, the company's internal
generation went down to Rs 6.68 billion from Rs 7.93 billion.

Despite a drastic cut in prices of most of its models, MUL's
total sales of vehicles during the year had declined to 309,094
units from 327,264 units. Production was down to 332,931 units from
354,336 units.The company resorted to a production cut of 20 per
cent in November 1998. Exports too suffered and dropped to 24,410
units as against 25,994 units the previous year.

Interestingly, the company managed to show increase in its net
worth by 23 per cent which improved to Rs 26.06 billion from Rs 21.23
billion.